Exam 16: Investment Concepts

The average return earned by a portfolio of stocks can be computed by summing the returns associated with the individual stocks and then dividing the result by the number of stocks in the portfolio.

A ____ order is an order to execute at the best price available when the transaction reaches the market.

A brokerage firm that offers a variety of services to its clients, including research information about stocks and bonds, monthly publications that contain investment recommendations, and investment advisory services is called a(n)

Use the information below to solve for the dividend yield for Midas.

An investor's ability and willingness to accept risk is termed:

There are a number of different stock market indexes that differ primarily because they include different combinations of stocks; but, the computation for each index is essentially the same.

All of the following are reasons to monitor your investment portfolio except to

Holding Period Return Portfolio -Refer to Portfolio.What was the one-year holding period return for the portfolio in 2009? Assume any dividend payments are included in the market value shown above.

When the financial markets become more unstable and unpredictable than normal, many professional investment managers shift their asset allocations from ____ to ____.

Asset allocation refers to the proportion of funds invested in various categories of assets.

The relative amount of personal funds, or initial equity, an investor can borrow from the broker when purchasing stocks on margin is called the initial margin requirement.

All else equal, investors who are risk averse will pay more for a security with a higher level of risk.

Geometric Average Return Foxy Ladies Investment Club The Foxy Ladies Investment Club purchased 100 shares of common stock each in Coca-Cola, Intel, and Merck on January 02, 2010.A summary of their portfolio is given below: -Refer to Foxy Ladies Investment Club.What was the portfolio's simple arithmetic average return per year from 2010 through 2012?

An investor earned a 5 percent holding period return on a stock he originally purchased for $50.The stock paid a dividend equal to $3.What was the price of the stock when it was sold?

When the market is rising we call it a ____ market, which suggests the economy is performing well; when the market is falling we call it a ____ market, which suggests the economy is performing poorly.

When the market is rising, it is called a bull market.

Individuals who try to make a quick profit based on short-term market adjustments are referred to as

Because the simple arithmetic average return does not consider compounding, its value is always less than or equal to the geometric average return.

An investor receives a margin call because

An order that specifies the price at which a market order is initiated is called a ____ order.